More disinformation from the ABC

I am actually getting to the point where I can barely bring myself to watch the ABC.  If we are home, we will turn on The Drum but find that we increasingly turn it off.  Ditto Insiders.

Anyway, we were watching this morning and we had Phil Coorey pretending he knew everything about the closure of Alcoa Point Henry and the supposed irrelevance of the carbon tax, noting in fact that Alcoa Australia as a group had been able to sell some of its free permits from last financial year (which is true).

(More generally, I am just amazed how ill-informed most journalists are.  The primary sources are easy to access, but they seem to prefer to source their ‘information’ at the end of a phone line when the other party has a line to push.  Work harder, I say, and let the phone ring off the hook.)

Here are the salient facts:

  • Companies operate on future prospects, not the here and now.  The fact that free permits were allocated last year is fine but the real kicker is what is the expected time path of the carbon price, the allocation of free permits and the price of electricity.
  • Initially, aluminium smelting (along with a number of emissions-intensive activities) were allocated 94.5% of their emissions in free permits (note the amazing amount of compliance for the companies needed to achieve this).
  • Each year after this, the number of free permits is ratchetted down by 1.3 per cent per year – to encourage energy efficiency.  In compounding terms, this begins to hurt pretty quickly.
  • The carbon tax was designed to increase each year until the ETS was implemented.  Initially, there was to be a floor price of $15/tonne, but this was then dropped in favour of hitching our wagon to the European scheme (current prices <$10/tonne but who knows?) – talk about regulatory uncertainty.
  • Note also the completely bizarre feature of a policy that was ostensibly designed to take us to a Clean Energy Future but involved trying to bribe the most emissions-intensive operations to hang around.
  • To be sure, the Point Henry facility could only have survived with a massive investment upgrade.  But given all of the above, there was no way that a board of directors could have signed off on the hundreds of millions that would have been required, particularly given the world price of aluminium.
  • Actually, Alcoa is probably sufficiently large to affect the world price of aluminium through its actions of closing down down some operations. Unless Point Henry could have moved into the lowest cost quartile of production, it was a sitting duck for closure.  All factors contributed to this outcome, including the important consideration of the forward price curve of electricity.

Just on another matter:  The aluminium smelter in Bell Bay owned by Rio Tinto hangs on by a thread.  It is hard to see how it makes money from it, but it is probably part of a larger corporate deal in which Rio’s aluminium assets (disaster, by the way) are packaged up and spun off.  A previous attempt had to be aborted.

Had the AWU not come up with an accommodative package and dropped its ridiculous claim for parity of wages with mainland workers, Bell Bay may still have been closed. Unless there is significant investment in the facility in the future, put down Bell Bay’s prospects down as SHORT TERM.

 

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32 Responses to More disinformation from the ABC

  1. boy on a bike

    It is worth dipping into history. I was talking to a family member who knows a thing or two about the politics of that smelter – he was talking to Alcoa execs a lot back then.

    The viability of the smelter was doubtful before it was built. It only got built because the Vic govt of the day offered an unbeatable deal on electricity prices. The key to keeping it open was to ensure that those prices remained at rock bottom for now and into the forseeable future.

  2. Luke

    “I am just amazed how ill-informed most journalists are”

    Really? I’m not. It’s a self-imposed ‘ill-informed’. There is no such thing as ‘truth’ or facts for journalists anymore, only the narrative.

  3. incoherent rambler

    I am actually getting to the point where I can barely bring myself to watch the ABC.

    The ABC has become the fur ball of cats.
    Yes, it makes you gag and you would really like to get rid of it, but it persists.

  4. Mike of Marion

    Judith,
    You can rest assurred that Coorey would not expect any challenge to his statement. He is on the ABC to utter what he wishes. Any challenger like a Hennderson would be immediately ‘talked over’ / interrupted by a Cassidy or a Middleton.

  5. stackja

    More disinformation from the ABC

    Always Biased Corporation.

  6. ProEng

    “boy on a bike” You are wrong about Point Henry. Alcoa makes their own electricity using brown coal from their own mine at Angelsea. (that brown coal is better quality than in the Latrobe Valley having only 45-50% inherent moisture compared with 60-66%%) Alcoa hope to sell the power station while the Point Henry works is closed and demolished. The Portland works has a special electricity deal, however it has the advantage of cheap natural gas from the Otway field. As Judith says the old Bell Bay works is hanging on a thread. It would have been closed if there was no natural gas supply. The Portland works (and Bell Bay) would close if the carbon (dioxide) tax is not removed.

  7. Ivan Denisovich

    The ABC has become the fur ball of cats.
    Yes, it makes you gag and you would really like to get rid of it, but it persists.

    The ABC is a den of thieves. I reserve a particular contempt, though, for the Appeasement Party which has let them get away with it for decades.

  8. Anon

    Kudos to the ABC. It went full retard.

    Never go full retard.

  9. boy on a bike

    Must have my smelters confused.

  10. Hey chums, would anyone like to throw me some alternative facts so I can do a response to this?
    Thanks

  11. Token

    I am just amazed how ill-informed most journalists are. The primary sources are easy to access, but they seem to prefer to source their ‘information’ at the end of a phone line when the other party has a line to push. Work harder, I say, and let the phone ring off the hook.

    You would not have so many people reading these blogs if that was not the truth and their experience.

  12. Bruce of Newcastle

    The carbon tax was designed to increase each year until the ETS was implemented. Initially, there was to be a floor price of $15/tonne, but this was then dropped in favour of hitching our wagon to the European scheme (current prices [below] $10/tonne but who knows?) – talk about regulatory uncertainty.

    Carbon price in China: $0 per tonne

    Unfortunately Coorey cannot do arithmetic. Must be all the first nations stuff they had to do in Maths in his school.

    The carbon tax cost Alcoa $137.2 million last year. Would they have closed Pt Henry if their forward estimates didn’t include it…or Rudd’s expected ETS of $38/tonne? Probably not.

  13. Squirrel

    “…..The aluminium smelter in Bell Bay owned by Rio Tinto hangs on by a thread…..”. If/when it does go, adding to the grim toll of job losses, it will all, of course be the fault of the Abbott Government and the Opposition Leader will presumably just repeat his “standing up for jobs” slogan, without accepting any part in the collective responsibility, and without suggesting any realistic alternative.

    On the broader point about the ABC, yes – it is an increasingly closed loop.

  14. Token

    Hey chums, would anyone like to throw me some alternative facts so I can do a response to this?
    Thanks

    Note how there are no links to the source of the numbers. All we can suggest is get some references on the time lines of those stats.

    Are they for a single month / quarter or the life of the presidency?

  15. Squirrel

    “Token

    #1199810, posted on February 23, 2014 at 1:12 pm

    I am just amazed how ill-informed most journalists are. The primary sources are easy to access, but they seem to prefer to source their ‘information’ at the end of a phone line when the other party has a line to push. Work harder, I say, and let the phone ring off the hook.

    You would not have so many people reading these blogs if that was not the truth and their experience.”

    Splendid point.

  16. Tokes, I was thinking more along the lines of
    “Number of dead ambassadors: 1″
    etc

  17. Bruce of Newcastle

    OHH – Those are correct numbers as far as I understand.

    But they are like the climateers who draw trends in Arctic sea ice from 1979 to the present. 1979 was the very top of the cycle. Jan 2009 was the very bottom of the economic cycle.

    To answer the poster, try this graph and these 37 factoids.

  18. Milton Von Smith

    I am actually getting to the point where I can barely bring myself to watch the ABC.

    You have only just now reached this point? What planet have you been on?

  19. M Ryutin

    Funny how certain media people ‘forget’ that for the carbon taxes to work, smelters have to close and that the short-term bribe (to virtually pay their carbon tax for a number of years to keep them going) is only postponing the inevitable closure. Same goes for Whyalla steel businesses , which were only ever created due to the typical Playford subsidies by taxpayers (a la Elizabeth for Holden).

    Coorey is no different from most of the pathetic press gallery, looking at one year in advance (sold credits and posted a profit). Too thick to know that multi nationals have a habit of doing that and that it can be quite profitable for them to close in one country and create elsewhere (Redcar in the UK where those wanting to close the plant could have made enough carbon credits from closure – and total loss of the British workforce – to actually pay for a new plant in the home country, India). It is also a way for quick, one-off profits and if the Victorian brown coal stations were owned by multi- national interests, what would stop one of them under a carbon credit regime of closing a power station whenever it likes and banking overseas the profits from reduced carbon emissions.

    Overall though, Greens, Labor and all those who demand real action to reduce fossil fuel emissions insist that these industries be closed.

  20. wazsah

    The price for Certified Emission Reductions on the euro-carbon exchange is now E0.33 or ~AU50c. Compare the Gillard carbon tax of – what AU$24?
    Price chart here
    https://www.theice.com/marketdata/reports/ReportCenter.shtml#report/94
    Definition – Certified Emission Reduction units (CERs)
    https://www.theice.com/productguide/ProductSpec.shtml?specId=814666
    Quotation Euro (E) and Euro cent (c) per metric tonne.
    I wondered why Judith mentioned ” European scheme (current prices <$10/tonne but who knows?)"
    is the price really AU50c ?
    Or is there some other scheme I have missed ?

  21. sabrina

    On another matter: Rio Tinto suspended its Grove Alumina Refinery operation in Northern Territory, late last year. Adam Giles, the CLP Chief Minister, offered to subsidize, but Rio Tinto rightly declined the offer. There were 1500 employees.

  22. Bruce of the Blue Mountains

    In response to the request from Ooh Honey Honey – #119974 above. Here’s some good ammunition – 252 documented examples of Obama’s lies.

    http://www.infowars.com/252-documented-examples-of-barack-obamas-lying-lawbreaking-corruption-cronyism-etc/

  23. This whole rigmarole of Carbon Certificates is nothing less than economic sabotage. During the Russian revolution, the proponents of this behavior were called ‘wreckers’ and shot.

  24. Yon Toad

    Sell it, disband it, burn it and scatter its ashes in a graveyard at midnight – I don’t care. It’s a sheltered workshop for those afflicted by group-think.

  25. Shelley

    Thought the very same thing when Phil Coorey said that, and promptly hit the off button and got out and enjoyed the beautiful morning that it was. Sometimes you just gotta make that call.

  26. Boambee John

    Personally, I prefer the alternative ABC – Akerman, Bolt and Catallaxy. I can also go full Gary Trudeau, and toss in BD – Blair and Devine.

  27. Shelley

    Ooh Honey Honey, this is a good start.

  28. Andrew

    Funny how certain media people ‘forget’ that for the carbon taxes to work, smelters have to close and that the short-term bribe (to virtually pay their carbon tax for a number of years to keep them going) is only postponing the inevitable closure.

    Funny how all these subsidies were paying the WBCT for them for just long enough to make the closures fall into the first couple of months of the Abbott666 govt.

    Then the massive FBT increase – don’t do it at the 2010 budget when they knew they had a problem. Do it at the start of the election campaign. It didn’t even raise a cent – it just made the black hole bigger, and then they keep the tax as part of their platform so Holden knows it will return with the next ALP grubiment (along with the WBCT backflip to ensure the impost per car was seen as permanent).

    Has any grubiment in history deliberately inflicted such harm on long-standing industries? Has one ever handed out money to time the closure in the next govt’s term?

  29. This is not a man-bites-dog story, nor even a dog-bites-man story, I submit, but a dog-bites-dinner story. A lot of effort, typing and bytes would be spared if someone would tell us only when ABCNews doesn’t spread disinformation about anything at all related to climate “science”, mining, smelting, manufacturing etc.

  30. Old School Conservative

    Smelters closing. Car manufacturers shutting up shop. Refineries suspending their operations. Carbon taxes ruining profit-making and viability of numerous businesses. The rabid left’s long-term strategy is working.

  31. Blogstrop

    If energy and labour costs cannot be controlled, we are not going to have any manufacturing. The task ahead is to work out how to pay for and build better infrastructure to get our farm and quarry products to market as efficiently as possible. Road, rail, ports, and yes, broadband – although best done with a sensible mix of technologies, not fibre to evry door.

    All those who lost jobs in manufacturing will have to be offered jobs building infrastructure. What else can they do? They’re not going to all become baristas, or merchant bankers.

  32. Pat Warnock

    I’ve given up on 24 even though it means putting up with ads.

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